10 changes in tax law you need to know about before submitting your application in 2024

Imagine not knowing about tax advantages that might save your company hundreds of dollars. Money that may very well be used to buy latest equipment, put toward hard times, or reward hard-working employees? Now spare a thought for Pat, who almost missed an opportunity in 2021 to secure something tangible loan for keeping the company’s handyman at work during the pandemic. Fortunately, Pat learned that you can access the credit by amending your 2020 and 2021 IRS returns (the IRS allows this for three years after filing). If Pat came upon about the loan today, it would not be available. Even though it was relatively small to Pat, it still mattered.

This is just a small example of the way it is value maintaining to date with changes in tax law. Any change passed by Congress (or even local governments) could save or cost your business. Most small businesses will spend the next few weeks filing their 2023 taxes. This is a good time to look at changes you may have missed when planning for 2023, but which you can still make the most of.

Knowing the latest tax regulations does greater than just impact your annual business tax. Knowledge of changes in tax law in advance allows you to plan your funds higher. You can get monetary savings to make sure you will pay. If you pay less, you can use that cash to implement business strategies that you may have had to postpone or forego altogether.

The 2023 tax filing season has barely begun, now is the time to check in on what changes have occurred that can impact your business. If any of those elements give you pause, act now to prevent difficulties closer to April 15.

The 10 most vital changes to concentrate to when filing your tax returns for 2023

1. Depreciation. Previously, corporations could deduct the cost of enormous assets over their expected life. If a $1,000 computer was expected to last 10 years, you could deduct $100 a 12 months for it until the last 12 months you used it. This likely reduced your tax liability. As of mid-2017, the company could claim a 100% depreciation bonus on this. (Bonus depreciation was the government’s way to encourage small businesses to invest and shake up the economy). However, in 2023 this bonus has reached 80% and will decline by 20% more each 12 months until bonus amortization ends.
2. Environmental loans. The credits available for your business vehicle under the Mitigation of Inflation Act 2022 vary depending on whether you placed your clean vehicle in service between January 1 and April 17, 2023, or between April 18 and later.
3. Retirement plan incentives. If you employ up to 50 employees and are considering rewarding them – or want to be more competitive with your employees – any costs you incur to determine (*10*)retirement plan is now fully deductible up to $5,000. Companies with 51-100 employees can receive a loan of fifty% of their costs.
4. Tax relief for employer contributions. If your retirement plan includes employer’s contribution, some or all of this expense could also be treated as a federal tax credit. This credit can only be awarded to participating employees who earn $100,000 or less, depending on how much of their contributions you cover. The limit per worker is $1,000.
5. Changes to net operating loss deductions. It used to be that if you had a net operating loss – say, you spent $10,000 on inventory but only made $8,000 in sales – you could carry that $2,000 loss forward to the next tax 12 months. From 2023 it should only be possible deduct 80% of this loss ($1,600 in this instance).
6. Mileage changes from tax 12 months 2022. When using a personal vehicle for business purposes, the mileage deduction increased in 2023 to 65.5 cents per mile (from 62.5 cents). This also applies to reimbursement of employees who drove the vehicle on your behalf.
7. Form 1099k The American Rescue Plan Act of 2021 required third-party clearing organizations (similar to eBay, Amazon, and PayPal) report transactions to the tax office if they exceeded $600 for the 12 months. If your business (or, more likely, a side business) sells products through an online store, you may have had to provide your Social Security number or Employer Identification Number in order to receive Form 1099K. However, at the end of 2023, the IRS announced that it will be one other 12 months “transitional year”, and you may not receive the form. You still have to report this income and pay tax on it.
8. Reducing interest costs. It has existed since 2017 limit to the amount of interest you can deduct. This was modified in 2022 and clarified in 2023. The IRS describes the changes Here. The gist is that with a lower limit and higher rates of interest, it might not be possible to deduct all of the interest. If this is applicable to you, now is a good time to seek help from a tax advisor.
9. 401(k) contribution deadlines. Tax 12 months 2023 is the first 12 months that sole proprietors and single-member LLCs can make first-year contributions by the April 15 tax filing deadline.
10. Meal and entertainment. If you began your business during the pandemic, when you could write off 100% of those costs, remember that only 50% of the costs Food and entertainment expenses in 2023 is deductible.

Be sure to make sure you don’t miss local changes while focusing on federal ones. Iowa and Arkansas reduced the highest corporate tax rate in 2023; or state and local governments?

I need help? The IRS is hiring customer support representatives — although the recent budget agreement reduced some of the funding allocated in the Inflation Control Act.

I can not wait for 2024. How will you hear about these changes? Be alert to reports in the business press or in the business section of a credible news organization (either in print or online; you are already reading Entrepreneur.com) or a specific industry publication. The IRS website offers a number of help. Press releases will provide early warning of upcoming changes. Also look for tax news sites, chambers of commerce, the Small Business Administration, your nearest small business development center, any industry associations you may belong to, your accounting software provider’s blogs, or contact your accountant.

Remember that tax season actually lasts 12 months of the 12 months. Stay organized, plan for the future and start seeing changes in 2024 now. This allows you to adapt and grow.